Sony sees annual loss mounting to $2.5 billion as smart phone business struggles
17 Sep 2014
Sony Corp on Wednesday sharply deepened its net loss estimate and said it would not pay a dividend this fiscal year for the first time since it listed in 1958 after it was hit by a massive impairment charge for its struggling smart phone division.
''As a result of revising the Mobile Communications (MC) segment's mid-range plan, Sony Corporation will record an impairment charge of approximately 180 billion yen, the entire amount of goodwill in the MC segment, in the second quarter of the current fiscal year,'' Sony Corp said in a release.
Sony Corporation said it has revised its consolidated results forecast for the fiscal year ending 31 March 2015 (1 April 2014 to 31 March 2015) as follows:
Reflecting the impairment charge in the MC segment, the company has revised downwards its forecast for consolidated operating income before taxes and net income attributable to Sony Corporation's stockholders by approximately 180 billion yen, respectively.
The downward revision is the sixth under chief executive Kazuo Hirai, who took his post in 2012 promising to pull the firm's troubled electronics division into the black by focusing on its mobile, gaming and imaging units.
"This is the first time we've not paid a dividend and we feel that responsibility as management very heavily," Hirai told a news conference, adding that Sony would aim to start paying dividends again as soon as possible.
The Japanese consumer electronics company has projected a 230 billion yen ($2.15 billion) net loss for the year ending 31 March 2015, against its previous forecast for a 50 billion yen loss. It expects an operating loss of 40 billion yen instead of a 140 billion yen profit flagged in July.
The move came after Sony was hit by a 180 billion yen ($1.7 billion) impairment charge for its struggling smart phone division.
Hirai said Sony is now revising its mobile division strategy and would cut 15 per cent of the staff in its mobile unit in the current fiscal year ending in March 2015 as it focuses on achieving stable profits in the unit.
Still, he said, Sony would keep mobile as one of its three core electronics divisions.
In July Sony also cut its full-year sales forecast for its smart phones to 43 million from 50 million, which would mark a 10 per cent increase on the year.
Sales of Sony's high-end Xperia mobile devices have suffered due to a lack of relationships with carriers in the crucial US market where its smart phones are so far only available on No 4 carrier T-Mobile US, as well as in China, where local makers are dominant.
